Monday April 1 2019


News Source: Global Exchanges

Focus: Other

Type: General

Country: European Union

Link: https://bit.ly/2CMyDDX



On 28th March 2019, the European Securities and Markets Authority (ESMA) published a statement on the Implementation of the new EMIR Refit regime for the clearing obligation for financial and non-financial counterparties.

The statement is addressed to all financial and non-financial counterparties subject to Regulation (EU) No 648/2012 (EMIR). It provides guidance on when they need to determine whether they are subject to the clearing obligation under the new regime introduced by Refit1, and equally when they need to notify ESMA and their relevant competent authority that they are indeed subject to the clearing obligation, i.e. on the day the Refit text enters into force.

The published Refit text includes a new regime to determine when financial and non-financial counterparties are subject to the clearing obligation, depending on whether their positions exceed or not the clearing thresholds. The clearing thresholds to be used to determine whether, according to their aggregate month-end average position for the previous 12 months, financial and non-financial counterparties are subject to the clearing obligation are defined by asset class and set in Commission Delegated Regulation (EU) No 149/2013.

Financial and non-financial counterparties can choose whether or not to conduct the calculation. When they choose not to, or where the result of that calculation exceeds the clearing thresholds, then these financial or non-financial counterparties are required to immediately notify ESMA and the relevant competent authority, and they will also become subject to the clearing obligation for the OTC derivative contracts entered into, or novated, from four months following that notification.

The new regime applies as soon as the Refit text enters into force. As a result, financial and nonfinancial counterparties taking positions in OTC derivative contracts and choosing to calculate their aggregate month-end average position for the previous 12 months would need to determine the results of that calculation on the day the Refit text enters into force (as early as end of May 2019). Those financial and non-financial counterparties are thus expected to collect all the necessary data and information for the calculation in the meantime, in order to be ready for the calculation.

This also means that all financial and non-financial counterparties taking positions in OTC derivative contracts and that do not calculate their aggregate month-end average position for the previous 12 months, or where the result of that calculation exceeds any of the clearing thresholds, whether previously subject to the clearing obligation or not, are required to immediately notify ESMA and their relevant competent authority on the day the Refit text enters into force.

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